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Why are Cinemas so important to Shopping Centres?

John Polkinghorne
Movies

Everyone loves to complain about movie prices, so why are we still paying them? And why are new cinemas still opening in shopping centres, even in the Netflix age?

It’s been more than 120 years since New Zealand’s first commercial film screening, and cinemas have had to fend off many challengers over the years. Netflix is the latest in a long line, along with other streaming services which make it easier for people to enjoy a ‘big night in’. Before Netflix, it was video stores – remember them? Video Ezy and Blockbuster are extinct, but cinemas are still very much alive.

Stats NZ data shows that in 1961, 40 million movie tickets were sold in New Zealand, for a population of just 2.4 million people – equivalent to every New Zealander going to the movies 17 times a year. We were one of the biggest movie-going nations in the world.

And then TV came along. By 1973, ticket sales had dropped to just 12 million, and 60% of New Zealand’s cinemas had closed. The ‘80s saw further decline, as VCRs became more common and Kiwis could tape movies to watch later. In 1991, only 6 million tickets were sold. Other countries saw similar trends during these decades.

But the cinema industry didn’t die: it evolved, and from the 1990s multiplex cinemas started to be rolled out across New Zealand.

Many of them were in shopping malls, where they helped to anchor food courts. The number of traditional, single-screen cinemas kept falling, but the number of screens was rising, as were ticket sales. By the early 2000s, admissions were hitting 17-18 million tickets a year.

Today, there are more than 400 cinema screens across New Zealand, with annual box office sales of around $200 million. And yet the industry is quite cagey about its admission numbers. The Motion Picture Distributors’ Association haven’t released any numbers for a few years, but it’s likely that there are around 14-15 million tickets sold a year. This means that the average Kiwi gets to the cinema 3 or 4 times a year, much like we did in the 1970s and 1980s. It also means that fewer tickets are sold today than in the early 2000s, even though New Zealand’s population has grown by 20%.
 

movie stats RCG NZ

So given the above, why are shopping centres still investing in cinemas? Why are they still an important tenant, and why are new cinemas still being built? The answer lies in another very important retail trend: the growth of hospitality, and more sophisticated food environments. Shopping centres have moved on from the food courts of the ‘90s, and they’re looking to cinemas to help anchor these F&B precincts, especially late-night activity like restaurants and bars.

As a result, we’ve seen some great new developments that include cinemas: EntX, which opened in Christchurch in September, is the most recent. Lynnmall in Auckland added a multiplex in 2015, and Bayfair, Tauranga Crossing and Westfield Newmarket are all constructing multiplex cinemas at the moment. On a smaller scale, RCG are very pleased to have been involved with boutique cinemas in Sydenham, Christchurch and Excelsa Village, Mt Maunganui.

Like other anchor tenants, cinemas tend to be “loss leaders” for shopping centres. They bring in new customers, people who are likely to do some shopping or grab a meal as well as catching a movie. And this turns out to be just as valuable in 2018 as it was 20 years ago.

Shopping centre owners can make the most of their investment in cinemas by creating late-night dining precincts, extending shopping hours, encouraging cross-promotion between the cinema and other tenants, and carefully managing parking to get the right balance between movie-goers and more active shoppers. Cinemas can make use of upper level or “deep” space that would otherwise be difficult to lease, and help to activate these areas. As with all retail, there’s an opportunity if the population and spending power keeps growing.

Cinemas also need to communicate their value offering to landlords. The trailers at the start of each movie are a valuable advertising tool. Cinemas are also getting better at collecting and using customer data. For Event Cinemas, the largest operator in NZ, online booking is surprisingly low at 30% - clearly people don’t like paying a dollar or two extra - but there are more than 1.5 million Cinebuzz members, accounting for 64% of admissions. Those are impressive numbers. Today, cinemas have also diversified into corporate entertainment and events, and merchandise sales are just as important as the old staple of popcorn.

Boutique cinemas can also be key destinations in their own right. The best of them have integrated food & beverage, and are hubs for their communities. Many of them have their own story to tell; saved from the wrecking ball and now refurbished and digitised for a modern era. These include the Roxy Cinema in Miramar, the Hollywood in Avondale, the Regent in Te Awamutu, Cinema Paradiso in Wanaka, and many more. They all remind us that retail and recreation in 2018 is about experiences.

EntX Cinema Complex
EntX Cinema Complex Christchurch (Image Source: stuff.co.nz)

In the Press

Local Media highlights from the past week...

 

Twyford says National-drafted legislation to strengthen the management of apartments and townhouses isn't a priority for the Government at the moment

Housing and Urban Development Minister Phil Twyford has said thanks, but no thanks to National, which had hoped he’d progress legislation it had drafted to strengthen the management of apartments and townhouses.

National’s Housing spokesperson Judith Collins and Auckland Central MP Nikki Kaye last month gave Twyford a copy of their Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill.

(Source: Insight)

 

New figures show Auckland's housing shortage is still getting worse but should start to decline in the next one to two years

An accumulated housing shortage of more than 34,000 homes has built up in Auckland over the last five years, according to the latest calculations by interest.co.nz.

Every year interest.co.nz estimates the Auckland region's housing shortage by comparing its population growth from both the natural increase in the region's population (the excess of births over deaths) and the net gain from migration (from both overseas and within New Zealand), and estimates how many additional dwellings would be required to house the extra people, based on average household occupancy.

(Source: Insight)

 

Why’s it so hard for builders to make money in a construction boom?

Kiwi builders have never been in hotter demand, but red tape is making it nearly impossible to get ahead. Alex Braae spoke to builders and bankers about the state of the construction industry. 

Willie Hewitt’s construction company, Westmoreland, is constantly flat out, but it’s never making any money. In the middle of housing boom he’s strapped for cash.

(Source: SpinOff)

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